There's an "interesting" article over at CNN that features the findings of a "study" done by the Boston Federal Reserve that claims that it's not toxic, exploding mortgages that triple in cost after a few years, causing foreclosure but the fact that people are experiencing job losses .
The article said:
Borrowers are more likely to default on their payments because they have lost their jobs or because the price of their homes has plummeted than because of tough terms on their mortgages, the study found.
"One of the most influential strands of thought contends that the crisis can be attenuated by changing the terms of 'unaffordable' mortgages," the economists wrote. But policies that focus on loan modification "face important hurdles in addressing the current foreclosure crisis," they wrote.
The economists suggest that the government could instead replace part of an individual homeowner's lost income from a job loss through loans and grants and help those whose predicament is more permanent become renters.
Let's first make something very clear, people who experience job losses are definitely likely to eventually face foreclosure, that's a given. But job losses do not supplant the fact that toxic mortgages weighing down Americans are the leading cause of foreclosure in this country.
There are literally millions of Americans losing their homes to foreclosure because their mortgage payments have doubled or tripled because they were signed up for "creative" loans called adjustable rate mortgages. Adjustable rate "exploding" mortgages are ground zero for our current foreclosure crisis.
Furthermore, homeowners who have invested years of equity into their homes DO NOT need help becoming renters or new loans to pay for the toxic loans they are suffering under. What we need now is to hold the banking class accountable for signing millions of Americans up for unaffordable mortgages. We need to empower our bankruptcy system to modify these toxic mortgages so that homeowners can save their homes from foreclosure using our bankruptcy system.